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The state government is gutting a tough new law that forces developers to spell out the rights of home buyers. This is because authorities can’t agree on what constitutes the ”front page” of the sales contract, where they must be displayed.

The move to strike out the legislation, which was designed to improve transparency in the sale of off-the-plan units and houses, comes as the new homes market struggles with flagging buyer demand.

From December 1, developers would have been required to put a warning on the front page of off-the-plan sales contracts stating that: a deposit was negotiable but capped at 10 per cent of the purchase price; a ”substantial period of time” could pass before the buyer took possession; and the value of a property could ”change” before settlement.

Failure to place the notice meant buyers could rescind the contract.

This 2010 amendment to the Sale of Land Act was created following growing conerns about the fairness, transparency and complexity of the contracts, which often run to more than 100 pages. (The then Labor government also tried, and failed, to increase the maximum negotiable deposit to 20 per cent.)

But the Baillieu government is now set to reverse the law, citing concerns that the ”front page of a contract can mean different things to different people, as well as legal decisions that raise doubts regarding terminology of this nature”.

Instead, the warnings can now be placed somewhere ”conspicuous” in the contract. The government also removed the right of buyers to cancel a contract if no warning appears because it was a ”disproportionate” response for a breach of the law. The move comes as the Housing Industry Association claims the new homes market is facing ”recessionary conditions” aggravated by the government’s decision to axe the first home grant bonus.

”These amendments would be a positive change for developers and agents in relation to off-the-plan contracts of sale,” commercial law firm Middletons said. ”Developers will be able to keep marketing materials on the front page and include the warnings elsewhere in the contract.”

A spokesman for Consumer Affairs Minister Michael O’Brien declined to comment on whether the government had been lobbied to change the law.

Meanwhile, yesterday marked the start of the spring selling season. The Real Estate Institute of Victoria said the clearance rate was 62 per cent for the 446 results reported. The outcome of another 45 scheduled sales was unknown.

A fortnight ago, only 57 per cent of the 467 properties on offer sold.

”It’s good to see demand is improving on what we saw through the middle of winter but there’s still a long way to go for spring,” REIV spokesman Robert Larocca said. The market’s performance has also been boosted by what proved to be the lowest auction activity level for a spring opening weekend in six years.

”It looks like supply will be tighter than usual at the start of spring and that the increase in supply we characteristically see in October may not happen,” said Monique Sasson Wakelin, director of Wakelin Property Advisory. ”We could be looking at a late run of supply in November and early December.”